Diabetic retinopathy is characterized by altered vascular permeability and angiogenesis, as well as impaired insulin signaling and resulting apoptosis in retinal neurons. The project is based upon a paradigm shifting postulate suggesting that the underlying abnormality in diabetes is the inappropriate metabolism of palmitate into bioactive ceramide in peripheral non-adipose tissues, including the retina. A corollary to this postulate is that insulin-resistance is a consequence of augmented de novo ceramide synthesis, leading to disruption of insulin-dependent AKT signaling. The overall hypothesis of the present proposal is that altered ceramide metabolism in diabetes leads to insulin receptor dysfunction within membrane microdomains (rafts). Our preliminary data suggest that C16-ceramide selectively accumulates in diabetic retinas, a possible result of palmitic acid-induced de novo synthesis. In addition, exogenous ceramide mimics diabetic-induced insulin resistance, as evidenced by decreased AKT activity and cell viability. We specifically hypothesize that ceramide accumulation within lipid microdomains leads to diminished insulin receptor signaling as a consequence of altered interactions with signaling elements or scaffold proteins. We will use sophisticated biochemicals, molecular and genetic models to demonstrate that altered ceramide metabolism contributes to reduced insulin signaling in the retina. These studies have the potential to identify ceramide accumulation as a target that can be therapeutically or molecularly manipulated.